AIR NEW ZEALAND LIMITED (AIZ)
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29/08/2025

5

Downgrade to Sell from Neutral

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Air New Zealand's FY25 release has triggered a downgrade from UBS to Sell from Neutral. The broker's valuation has shrunk to NZ55c from NZ63c prior.

Higher operating costs and depreciation have triggered a chainsaw treatment for earnings and dividend forecasts. The broker is also citing delayed capacity recovery and higher airport charges into FY28–FY30.

As for the result itself, FY25 underlying pre-tax profit came in at NZ$189m, broadly in line with UBS, as aircraft availability issues and higher non-fuel costs were partly offset by NZ$129m in engine compensation.

The NZ$62m buyback continues. UBS adds the shares are still trading at a P/E premium to Qantas and Virgin.

FORECAST
UBS forecasts a full year FY26 dividend of 1.82 cents and EPS of 1.82 cents.
UBS forecasts a full year FY27 dividend of 1.82 cents and EPS of 3.65 cents.

04/09/2025

3

Neutral

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Jarden notes Air New Zealand's FY25 net profit before tax of NZ$189m met the top end of guidance provided in April, but masked very weak 2H as engine issues escalated. The full year earnings impact from engine issues was -$NZ$300m.

The result was supported by compensation from engine manufacturers and unredeemed covid credits booked as revenue. The airline expects to have 9-10 aircraft grounded in 1H26, with modest improvement thereafter. 

Reported net profit before tax in 1H26 is expected to be “similar to or less than” NZ$34m (2H25 result). The broker highlights this implies an underlying net loss of -NZ$41m when adjusted for covid credits and engine compensation.

Neutral. Target unchanged at NZ59c.

FORECAST
Jarden forecasts a full year FY26 dividend of 2.28 cents and EPS of 0.64 cents.
Jarden forecasts a full year FY27 dividend of 2.28 cents and EPS of 2.83 cents.